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Friday, July 1, 2016

On the face of it, the polls are close, albeit with the Coalition slightly ahead. In two-party preferred (TPP) terms:

The latest Galaxy poll (28-29 June) has the Coalition on 51 to 49 for Labor.

Ipsos (26-29 June) has it as a tie: with 50 per cent each to Labor and the Coalition

Newspoll (24-26 June) has the Coalition on 51 to 49 for Labor

ReachTEL (23 June) also has the Coalition on 51 to Labor's 49

In aggregate, and assuming any house effects sum to zero, I get an aggregated poll result of 50.6 to the Coalition to 49.4 to Labor. If I anchor the TPP aggregation to the 2013 election result, I get 51.6 to the Coalition and 48.4 to Labor.

Notwithstanding the long campaign, the Coalition has improved its position in the final weeks. If the Coalition wins the election, this will challenge the conventional wisdom that governments do poorly in long campaigns (based on the experience of the 1984 election campaign).

Moving from a TPP estimate to the number of seats each party will win is extraordinary complicated this election. The biggest confounding factor is the Nick Xenophon Team (NXT). Will they win a swag of seats, a couple of seats or none? And will they change the way preferences flow? The other confounding factors are the re-emergence of the independents Windsor and Oakeshott in rural New South Wales and the good showing for the Greens in the seat of Batman.

To address these confounding factors I will model 1,000,000 election outcomes using a mix of seat swings in 138 seats and longshot bias adjusted seat odds in 12 seats (namely, Melbourne (VIC), Denison (TAS), Indi (VIC), Kennedy (QLD), Fairfax (QLD), Cowper (NSW), New England (NSW), Barker (SA), Boothby (SA), Grey (SA), Mayo (SA), and Batman (VIC)). From this Monte Carlo Simulation, I will use the most common results to forecast an election outcome.

I start with the anchored poll result above (51.6 per cent for the Coalition; which in round terms is a 1.9 percentage point swing to Labor on the 2013 election). I make adjustments for different state swings based on Newspoll data as follows (where a negative number is a greater swing to Labor and a positive number is a lesser swing to Labor).

NSW

VIC

QLD

WA

SA

TAS

ACT

NT

0

-0.1

1.7

-2.5

-0.8

2.5

0

0

0

The resulting analysis identifies these seats as the most likely to change hands.

TPP 2013

TCP 2013

2013 Outcome

2016 Favourite

Seat

Bonner (QLD)

LNP 3.7%

-

Coalition

Labor

Brisbane (QLD)

LNP 4.3%

-

Coalition

Labor

Capricornia (QLD)

LNP 0.8%

-

Coalition

Labor

Fairfax (QLD)

-

PUP 0.03% v LNP

Palmer United

Coalition

Forde (QLD)

LNP 4.4%

-

Coalition

Labor

Lyons (TAS)

LIB 1.2%

-

Coalition

Labor

Mayo (SA)

LIB 12.5%

-

Coalition

NXT

Petrie (QLD)

LNP 0.5%

-

Coalition

Labor

Solomon (NT)

CLP 1.4%

-

Coalition

Labor

But this analysis ignores close seats like Batman, where the incumbent (Labor) is only just ahead of the Greens according to betting markets, and the result could easily go either way. We can address this problem with a Monte Carlo simulation of the probabilities for each seat. The results of the simulation are:

Turning to Primary votes: the campaign has been kind to the Coalition and unkind to the Greens. Labor declined for much of the campaign, but has managed a very late and small recovery. The independent vote looks like being particularly high, and will make this an that could see some surprise upsets.

Only one more sleep! This morning's odds were scrapped at 5.45am. With a win probability of 87.3% on average, the betting market strongly favours the Coalition to provide the Prime Minister in the next Parliament.

House

Coalition Odds ($)

Labor Odds ($)

Coalition Win Probability (%)

2016-07-01

Betfair

1.13

7.46

86.85

2016-07-01

CrownBet

1.09

7.20

86.85

2016-07-01

Ladbrokes

1.08

7.50

87.41

2016-07-01

Luxbet

1.08

8.00

88.11

2016-07-01

Sportsbet

1.08

8.00

88.11

2016-07-01

William Hill

1.10

7.00

86.42

Fr 24-Jun

Sa 25-Jun

Su 26-Jun

Mo 27-Jun

Tu 28-Jun

We 29-Jun

Th 30-Jun

Fr 1-Jul

Betfair

84.99

84.88

84.61

85.91

85.79

87.86

88.88

86.85

CrownBet

82.71

82.71

82.71

82.71

85.30

85.30

85.30

86.85

Ladbrokes

84.27

84.39

84.39

82.96

85.53

85.53

87.41

87.41

Luxbet

83.09

83.09

83.09

83.09

83.70

85.99

85.99

88.11

Sportsbet

82.71

82.71

82.71

82.71

86.42

86.42

88.11

88.11

William Hill

84.27

84.27

84.27

82.83

84.15

86.42

86.42

86.42

Average

83.67

83.67

83.63

83.37

85.15

86.25

87.02

87.29

Turning to the prediction market for individual seats ... first the odds